23 states grow foreign loans by 64%

Twenty-Three Nigerian states grew bilateral loans by 64.26 per cent in six months to $462.81m as of the end of June.

Most of the loans were taken from China, India, France and other countries.

This was despite the persistent fall of the naira, making dollar-denominated loans more expensive.

In June 2023, the Central Bank of Nigeria directed Deposit Money Banks to remove the rate cap on the naira at the official Investors and Exporters’ Window of the foreign exchange market.

Consequently, the naira fell from 471/$ to 750/$ as of the end of June 2023, and had continued to fall.

The increase in bilateral loans showed a growing appetite for this type of loans by state governors. According to external debt data from the Debt Management Office, 23 states increased their borrowing from China (Exim Bank of China), India, France (Agence Francaise Development), Japan International Cooperation Agency, and Germany (Kreditanstalt Fur Wiederaufbua).

Most of the bilateral loans were owed to the AFD, with debt to France growing by 21.84 per cent to $306.32m as of the end of June. Chinese, Indian, and other loans grew by 415.79 per cent to $156.49m as of June 2023. A breakdown of the states showed that Abia’s bilateral loans grew to $3.82m; Adamawa grew to $4.75m; Akwa Ibom grew to $3.82m; Bauchi grew to $3.82m; Cross River fell to $46.85m; Ebonyi took a first-time bilateral loan of $31.29m; Enugu’s debt fell to $4.75m; Imo’s grew to $26.04m; Jigawa secured a first-time loan of $864,535.16; Kaduna grew its loan to $91.47m; Kano grew to $24.39m.

Kebbi’s bilateral loan profile was $3.82m; Kogi was $3.82m; Kwara was $3.82m; Lagos was $130.67m; Niger was $9.14m; Ogun was $32.29m; Ondo was $8.50m; Osun was $8.95m; Oyo was $3.82m; Plateau was $8.50; and Sokoto was $3.82m.

In 2018, Nigeria secured a loan worth $475m from France for the development of projects in Kano, Lagos, and Ogun states.

The loan deal was signed by the then Minister of Finance, Mrs Kemi Adeosun, and the Chief Executive Officer of the Agence Francaise Development, Mr Rey Rioux.

The breakdown of the loan included a $200m loan facility grant to Lagos for the execution of transport projects by AFD, another $200m loan for land degradation project in Ogun State, and $75m for the execution of water projects in Kano State.